Testing gear maker Tektronix beats Street

The company, a maker of test and measurement equipment, tops analysts' third-quarter estimates but warns of lower-than-expected sales in its fourth quarter.

January 2, 20024:43 PM PST

Tektronix topped analysts' estimates in its third quarter Thursday but warned that the economic slowdown crippling chip and chip-equipment makers will result in lower-than-expected sales in its fourth
quarter.

In the quarter, Tektronix raked in $35.5 million, or 37 cents a share, on
sales of $326.9 million.

First Call consensus expected the manufacturer of test, measurement and monitoring equipment for the semiconductor industry to earn 32 cents a share
on sales of $313.8 million.

Tektronix shares closed off 34 cents to $24.66 ahead of the earnings
report.

Company executives, however, now expect fourth-quarter sales to improve only 10 percent to 12 percent from the year-ago quarter, resulting in sales
growth of only 20 percent for the fiscal year. Operating margins are
expected to be between 14 percent and 15 percent.

In fiscal 2000, Tektronix returned a profit of 83 cents a share on sales of $1.12 billion.

"We are beginning to experience the effects of the weakness in the market
through a slowing in our order rate," Wills said in the release. "The
economic impact on many of our core customers is apparent, and we have traditionally lagged our customers in a slowdown period. At this time, we
expect to see orders decline around 10 percent next quarter."

"Tektronix is suffering from some of the same problems that Agilent is
facing," he said. "I expect the quarter to be in line with estimates but
think there's a decent likelihood they will lower guidance going forward," he said.

Last quarter, Tektronix easily topped Street estimates when it posted a
profit of $36.7 million, or 38 cents a share, on sales of $325.1 million.

The company's shares rallied up to a 52-week high of $43.66 in July after bottoming
out at $22 in April.

"At this valuation, regardless of what they say about the fourth quarter,
the stock is trading at a significant discount," Kunstler said. "Investors
willing to weather the near-term storm will find a pretty good investment opportunity."

Seven of the nine analysts tracking the stock rate it either a "buy" or
"strong buy."